Black Powder is a consumable artificial powder that enhances Magic Users' smoke.
Black Powder is usually bought by weak sorcerers and Cross-Eyes members. Black powder can also give non-magic users smoke powers.
The powder was created By Kai and distributed by his organization and was a by-product of his research. Kai's research was about trying to achieve control over all of the types of Magic from the Devil Tumors of Magic Users killed by the Cross-Eyes. This also helps them fundraising their activities. People started to gather around Kai and the top members of the organization. They believed the Boss created the powder to give people unable to produce magic a second chance in life and oppose the elite Magic Users. Kai never spoke about any of this, making these made-up ideas from people.
After Curse was created by the death of Risu. The Boss tried to escape from it and with him and the secret to producing Black Powder was lost. With the basic product of the organization gone, The Cross-Eyes became a segregated and dispersed group. Some of the members were stationed in the Dark Forest trying to replicate the process with no success. Apparently, no none of the members actually knew that the Black Powder is actually extracted smoke essence from the Devil Tumors. This is done by sucking the last drop of smoke from them until they end up mummified, and others started to sell coal dust. It has a similar appearance to the powder and they're able to scam Black Powder addicts and other hope-less people.
Consuming black powder from an early age can improve significantly the smoke power. Even a common transformation-type smoke like Ebisu's reptilian transformation-type can be sold at high price for its enhanced effects.
With the Boss return, the Cross-Eyes started to kill Magic Users once again and Kai used a room in En's Mansion to extract the essence from Devil Tumors, but this time to create a Hide of Magic Users flesh injected with black powder from hundreds of them to merge with it and become an Artificial Devil. The Boss (now an unintelligent beast incapable to move by his own) and the rest of the Cross-Eyes officers went to Hole but a trace of Black Powder generated now by Kai himself (leaking from the tubes around his body) was followed by a group of new enrolled Cross-Eyes led by Yasaka, believing that the strange creature that the officers were carrying (not knowing it was the boss) was the source of black powder and they wanted it all for themselves.